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E-Commerce Adtech M&a Expected to Rise in 2022: Experts – Business Insider

Summary

The M&A market for tech firms that help facilitate retail advertising is heating up.
Agencies and private equity firms are gobbling up companies in the space.
Insider spoke to buyers about what they’re looking for in acquisitions.

Ecommerce advertising is booming as people shop more online, and retailers like Walmart and Macy’s are scrambling to build bigger advertising businesses.

Thi…….

  • The M&A market for tech firms that help facilitate retail advertising is heating up.
  • Agencies and private equity firms are gobbling up companies in the space.
  • Insider spoke to buyers about what they’re looking for in acquisitions.

Ecommerce advertising is booming as people shop more online, and retailers like Walmart and Macy’s are scrambling to build bigger advertising businesses.

This mad dash is kicking off a wave of deal making from ad agencies and private equity firms who are racing to buy companies that use artificial intelligence and machine learning to make retail advertising more effective.

The stakes are big. Boston Consulting Group estimates that e-commerce advertising is a $100 billion market for retailers.

E-commerce ad dealmakers don’t typically disclose their terms. However, private equity has done 293 e-commerce deals so far this year, up from 220 last year, according to PitchBook data. And venture capital has invested in 2,906 e-commerce deals so far this year, up from 2,514 last year, per PitchBook data.

Private equity has been particularly aggressive in acquiring these firms to build one-stop shops for sellers’ e-commerce needs. Ad agencies and consultants like Publicis Groupe and Ascential are also active buyers.

“Any of the largest agencies that don’t have commerce will struggle if they’re doing business with consumer brands,” said Chad Hetherington, CEO of e-commerce agency The Stable, which is backed by private equity firm Growth Catalyst Partners.

This year:

  • Publicis Groupe bought adtech firm CitrusAd.
  • Private equity-backed Assembly acquired adtech firm Pacvue.
  • Ascential acquired e-commerce firms Perpetua and SKU Ninja + WhyteSpyder.
  • Tinuiti acquired Amazon firm Ortega Group.
  • Private equity-backed Jungle Scout acquired Amazon agency Downstream.
  • E-commerce agency The Stable acquired The Retail Firm.

Insider spoke with retail and ad experts about what they look for in acquisitions and what types of companies could be acquired next.

Experts predict more consolidation

Hetherington said he’s looking for companies that help brands sell on platforms like TikTok and Instagram.

Jonathan Opdyke, partner at Greatwater Opportunity Capital and managing member at Beyond Hook Ventures, said adtech companies that help sellers advertise and manage prices across retailers are attractive targets.

He also sees more demand for companies that help advertisers measure the efficiency of their ad spend.

“Whenever a retailer opens an API, people rush to fill it, and then it becomes a pricing war,” he said. “Those with the biggest war chests to acquire companies will win there.”

Advertisers are seeking help navigating retail media

Amazon has spawned a cottage industry of firms that help brands sell and advertise on its platform. But as other retailers build advertising businesses, adtech firms and agencies that work with those sellers are in demand.

Unlike digital advertising, …….

Source: https://www.businessinsider.com/e-commerce-adtech-ma-expected-to-rise-in-2022-experts-2021-12